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ISAIS 2011: Rome, Italy. A Relative Cost Framework for Rethinking Assurance of XBRL Filings. Glen L. Gray, California State University, Northridge, USA Michael Alles, Rutgers Business School, USA. Questions…. How much would you pay to insure your old car with a value of $650 ? - PowerPoint PPT Presentation
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A Relative Cost Framework for
Rethinking Assurance of XBRL Filings
ISAIS 2011: Rome, Italy
Glen L. Gray, California State University, Northridge, USAMichael Alles, Rutgers Business School, USA
2
Questions…• How much would you pay to insure your
old car with a value of $650?
• How much would you pay for a glass of wine at McDonald’s?
3
History• 1969: Al Gore invents the Internet• 1999: IASB and FASB each publish reports
regarding Web-based financial reporting—Many search problems
• 1999: Charlie Hoffman invents XBRL• 2000: Various groups start exploring XBRL
assurance issues—XBRL Int., AICPA, CICA, PCAOB…
• 2009: SEC mandates phase in of XBRL filings—but does not require assurance
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Scoping Assurance Services• Srivastava & Kogan, 2010• Boritz & No, 2011
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Srivastava & Kogan Framework
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Boritz & No Framework
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Who/What Provides Assurance
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Costs: What will the market pay?• External cost relative to internal cost
– whether it costs less to obtain assurance internally vs. having ex-post assurance of XBRL filing as the external auditor may be tasked with doing
• External cost relative to preparation cost– extrapolating what happens if the cost of
preparing XBRL filings keeps falling while the cost of assuring those statements keeps rising
[Assumption: voluntary choices]
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Costs: Volunteer Filing Program1st
submission/ block-text
footnotes & schedules
Subsequent submission/
block-text footnotes & schedules
1st submission/
detailed footnotes & schedules
Subsequent submission/
detailed footnotes & schedules
Preparation face financials
$31,369(125 hours)
$4,312(17 hours) $4,312 $4,312
Preparation footnotes $1,750 $1,750 $25,000 $12,500
Preparation schedules $250 $250 $2,500 $1,250
Software and filing agent services
$6,140 $6,140 $6,140 $6,140
Web site posting $1,000 $1,000 $1,000 $1,000
Total cost $40,509
$13,452
$38,952
$25,202
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Economically Feasible Space: Early Years
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Economically Feasible Space: Later Years
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Shifting Focus to Filing Agents• Volume, volume, volume• Converting fixed costs to variable costs• Shifting assurance from instance
documents to processes• SAS No. 70/ SSAE No. 16
Thank You!Grazie Mille!
Glen L. Gray [[email protected]] Michael Alles [[email protected]]
Questions?